Nokia Shifting Handset Manufacturing To Asia

February 8, 2012

Mobile handset maker Nokia plans to eliminate 4,000 manufacturing jobs in Hungary and Mexico, along with positions in its oldest factory, in Finland, as it shifts manufacturing to Asia, its largest market, reports Diana ben-Aaron for Bloomberg.

The cuts of 8 percent of the phone business workforce bring total planned job cuts at the group under Chief Executive Stephen Elop to more than 30,000. Finland-based Nokia said most of the company´s existing production will move to existing factories in Beijing and Masan, South Korea, spokesman James Etheridge said.

Mikko Ervasti, a Helsinki-based analyst at Evli Bank told the Bloomberg reporter: “They have to follow the suppliers. This is part of the actions Nokia has to take to reach the cost savings target of 1 billion euros by the end of 2013.”

Nokia is phasing out its Symbian operating system in favor of Microsoft´s Windows Phone software in a bid to stay relevant in facing the iPhone and Android mobile juggernaut.

Nokia´s smart phone sales declined 25 percent to 77.3 million units last year as customers shunned the Symbian line. Nokia introduced handsets running Windows Phone six weeks before the end of the year and said on Jan. 26 that it had sold “well over” 1 million of the devices “to date,” reports Tarmo Virki for Reuters.

After the 2007 introduction of the iPhone, Nokia lost more than 60 billion euros in market value before then-Microsoft executive Elop was appointed to take over in Sept. 2010. Nokia reported a 73 percent fall in 2011 fourth-quarter earnings after sales of its new Windows Phones failed to dent the dominance of iPhone or compensate for diving sales of its own old smart phones.

Nokia says the spread of locations — Hungary, Mexico and Finland — will work to their advantage on this, because it will mean the company can deliver custom variants to customers quickly, reports Chris Davies of Slashgear.

That could be anything from a small batch of Lumias specially created for VIPs, presumably similar to the Batman-themed models with their specially loaded wallpaper and other elements, through to larger orders of promotional devices.